Assume there is a contract that both parties breach on the same date. Thus, if either sues for breach of contract, the other would have a counterclaim for breach of contract.

If a complaint is filed on the last day before the statute of limitations has run, then the Defendant is permitted to assert the breach of contract counterclaim, right? Does anyone know what the principle is called so I can do state-specific research? Thank you.

(a) If a counterclaim or cross claim arises out of the same transaction or occurrence that is the basis of an action, a party to the action may file the counterclaim or cross claim even though as a separate action it would be barred by limitation on the date the party's answer is required.

(b) The counterclaim or cross claim must be filed not later than the 30th day after the date on which the party's answer is required.

Note that many Texas lawyers are unaware of this statute and miss the deadline set forth in subsection (b).

Look for something similar in your state. You really should disclose your state if you want the possibility of precise advice.

As harsh as dixieesq is sounding, there is a point to his statement. While I will not fumble around indefinitely, I will make sure I've devoted a solid effort (a couple of hours perhaps) before asking someone else. I tend to like to find research on my own. What I learn "sticks" better when I make a greater effort to find it.

Also, people who do not have a dog in your hunt will often give you bad advice, even though it was in good faith. Be sure and confirm anyone else's research (mine included). This is especially true of opposing counsel's research.

DixieEsq, I feel quite sure ti83 did look around a fair bit before asking. Noobs sometimes have a problem framing the question with the right search terms. It's a matter of applying the jargon they learned in law school, since once you get out, "experienced" lawyers constantly run around telling noobs that law school didn't teach them anything.

Once they get back to thinking about all the jargon and doctrines they were taught, it comes back together. They get better at it over time.

“[W]here the counterclaim asserts a recoupment which is not barred by the appropriate statute of limitations as of the time when the principal action was commenced, it will not be considered as untimely even though it is filed in said action at a time when if it were the subject of an independent action it could not be maintained by reason of the statute of limitations.” *1003 Atlantic City Hospital v. Finkle, 110 N.J.Super. 435, 440, 265 A.2d 853 (Cty Ct.1970) (emphasis added); see Gibbins v. Kosuga, 121 N.J.Super. 252, 296 A.2d 557, 560–61 (Super.Ct.1972). Under New Jersey law, for the purposes of the statutes of limitations, an action “commences” when the complaint is filed. 2A N.J.S.A. § 14–1 (West Supp.1983); N.J.Civ.Prac.R. 4:2–2 (Pressler 1983). Because the complaint was filed in September, 1980, and the limitation period did not expire until October, 1980, defendants' claims are timely.

It looks like NJ legal authority is not as clear as TX legal authority on this issue.

The counterclaim rule is N.J. Ct. R. 4:7-1 and it doesn't address the statute of limitations. There is one case that addresses the issue of a statute of limitations lapsing in between when a complaint is filed and an answer is due, which holds that recoupment is never barred by statute of limitations so long as main action is timely. Atlantic City Hospital v. Finkle, 110 N.J. Super. 435 (County Ct. 1970). Unfortunately, this is just a trial court decision, not appellate or Supreme Court of NJ.

Recoupment - counterclaim arising out of the same transaction or occurence.
Set-off - counterclaim arising from an independent transaction or occurence.

Thus, it looks like if this case does get filed against my client in approximately six years and the plaintiff is very calculating, there is some chance for him to be able to argue that my client's counterclaim is time-barred. However, I believe the probability that a judge rules in plaintiff's favor on this issue is low.

Thanks again for responding, Jeff. I'm a young lawyer and I've read your e-book - it changed my perspective on the value of my legal training and continuing my legal career.